Working Webware: Can Zoho get a good share of the SMB market?

Rafe Needleman of Webware and I hooked up for a video show, called "Working Webware," to look at some of the up and coming companies and products aimed at businesses. For our first show, Sridhar Vembu, CEO of Zoho and its parent company AdventNet, was on the hot seat. Zoho is one of the leading on demand productivity software solutions, but the company is going up against the likes of Microsoft and Google.

Rafe and I discuss Zoho's challenges with Vembu and then give our take on whether the company has a chance for success in the emerging Web 2.0 office software market. We agree that Zoho has many strengths today, especially its set of products, but it will take more to gain a major foothold in a market against such well endowed competitors.

Vembu responded to the our critique in an email:

I agree we face a massive challenge. Here is why I feel optimistic: at AdventNet, we get about 1.5 million downloads of our IT Management & Security products (they range from network/systems/app management to help desk and a lot in between). These products target SMBs directly. We count in excess of 25,000 organizations as customers. We have relationships with nearly a thousand resellers world-wide, and we are establishing tiered distribution partnerships around the world. That business is growing at a really fast clip.

I believe there is a huge untapped opportunity in the SMB segment for Zoho. That is why we are investing heavily (Zoho division alone has now 200+ people in engineering). Fortunately, our AdventNet business is doing extremely well to be able to afford the investment.

Of course no one can predict the future, but based on the response we are seeing for Zoho, I am really optimistic. I believe just as the desktop software industry had room for players like Adobe & Intuit to thrive in the face of Microsoft, we will carve out a space for ourselves in the online application business, assuming a Google-dominated world. Execution is the key, as always.

Indeed, execution is the key and to this point Zoho has done well in leading the pack in innovations, such as being the first to deliver Google Gears offline functionality--even before Google. Being first to move doesn't always win the race, but Zoho is relentless in its pursuit of carving out its space in the SMB market.